Debt market refers to the financial market where investors buy and sell debt securities, mostly in the form of bonds. These markets are important source of funds, especially in a developing economy like India. India debt market is one of the largest in Asia. Like all other countries, debt market in India is also considered a useful substitute to banking channels for finance. The most distinguishing feature of the debt instruments of Indian debt market is that the return is fixed. This means, returns are almost risk-free. This fixed return on the bond is often termed as the 'coupon rate' or the 'interest rate'. Therefore, the buyer (of bond) is giving the seller a loan at a fixed interest rate, which equals to the coupon rate. Debt instruments are hard copy or electronic documents that commit the issuer to repaying a lender according to the terms and conditions of a contract. Classic examples of debt instruments allow the issuer to raise money with this type of financial arrangement, often for the purpose of funding a project or retiring one or more debts. Businesses and individuals may lend and borrow using a debt instrument as the document that gives form to the obligation.

The market participants in the debt market are:1. Central Governments, raising money through bond issuances, to fund budgetary deficits and other short and long term funding requirements. 2. Reserve Bank of India, as investment banker to the government, raises funds for the government through bond and t-bill issues, and also participates in the market through open- market operations, in the course of conduct of monetary policy. The RBI regulates the bank rates and repo rates and uses these rates as tools of its monetary policy. Changes in these benchmark rates directly impact debt markets and all participants in the market. 3. Primary dealers, who are market intermediaries appointed by the Reserve Bank of India who underwrite and make market in government securities, and have access to the call markets and repo markets for funds. 4. State Governments, municipalities and local bodies, which issue securities in the debt markets to fund their developmental projects, as well as to finance their budgetary deficits. 5. Public sector units are large issuers of debt securities, for raising funds to meet the long term and working capital needs. These corporations are also investors in bonds issued in the debt markets. 6. Corporate treasuries issue short and long term paper to meet the financial requirements of the corporate sector. They are also investors in debt securities issued in the market. 7. Public sector financial institutions regularly access debt markets with bonds for funding their financing requirements and working capital needs. They also invest in bonds issued by other entities in the debt markets. 8. Banks are the largest investors in the debt markets,...

YOU MAY ALSO FIND THESE DOCUMENTS HELPFUL

...Compare with market value and analysts estimate.
Kindly refer excel sheet
2) Why did Iridium fail – Strategic reasons
The strategic reasons for the failure of Iridium are the following:
All the above strategic reasons contributed significantly towards the failure of Iridium.
3) Why did Iridium Fail – Financial Reasons. Each group should note the advantages and disadvantages of Bank Debt and Senior notes.
Advantages of Bank debt
Bank loans money to the business on the basis of the business and its capacity to service the debt by making timely payments.
Banks do not take any ownership position in the company. Bank never gets involved in any aspect of running a business to which a bank grants a loan.
Once the loan is paid off then there is no relation or involvement with the Bank.
The interest on the Bank loans is tax deductible.
Disadvantages of bank debt
Bank loans are difficult to obtain unless company has a good track record and or valuable collateral.
Banks will mostly lend to the businesses which has capacity to repay it.
Borrowers can be required to provide personal guarantees which in case of non -payment can be seized.
Interest rates for the Business loan can be quite high and Borrowers need to service the debt by making timely payments which in case of non-payment can have several repercussions.
Advantages of Senior Note
Senior notes carry relatively...

...Debt Advantages
Debt financing allows you to pay for new buildings, equipment and other assets used to grow your business before you earn the necessary funds. This can be a great way to pursue an aggressive growth strategy, especially if you have access to low interest rates. Closely related is the advantage of paying off your debt in installments over a period of time. Relative to equity financing, you also benefit by not relinquishing any ownership or control of the business.
Debt Disadvantages
The most obvious disadvantage of debt financing is that you have to repay the loan, plus interest. Failure to do so exposes your property and assets to repossession by the bank. Debt financing is also borrowing against future earnings. This means that instead of using all future profits to grow the business or to pay owners, you have to allocate a portion to debt payments. Overuse of debt can severely limit future cash flow and stifle growth.
| Debt Financing | Equity Financing |
Definition | Debt financing refers to any borrowed money which theentrepreneur must pay back to the lending institution. It can come in the form of a loan, line of credit, bond, or even an IOU. An interest rate and other terms apply. | Equity financing is money lent in exchange for ownership in a company.New businesses can use equity financing for...

...MAIN SOURCES OF EQUITY AND DEBT FOR PROJECTS
The main sources of equity and debt can be divided into two groups of lenders and sponsors.
Group 1 – commercial lenders, include:
1. Banks;
2. Institutional lenders;
3. Commercial finance companies;
4. Leasing companies;
5. Individuals;
6. Investment management companies;
7. Money market funds.
Groups 2 – commercial sponsors, include:
1. Companies requiring the product or service;
2. Companies supplying products or raw materials to the project;
3. International agencies;
4. Government export financing agencies, and national interest lenders;
5. Host government;
6. Contractors;
7. Trade creditors;
8. Vendor financing equipment.
We now look at the sources in detail:
1. The World Bank and area development banks
These provide debt or a mixture of debt and equity.
Advantages
1. The loans tend to be for longer terms than might otherwise be available.
2. Possibly offered at fixed interest rates.
3. Interest rates tend to be lower than would otherwise be possible.
4. Participation of the World Bank endorses the credit for other potential lenders.
Disadvantages
1. A lengthy approval process, which may delay the project for months or years.
2. The funds provided may be in currencies difficult to hedge and create significant currency risks.
2. Government export financing and national interest lenders
This is generally available from two...

...﻿PROBLEMS (p. 180)
1. A few years ago, Simon Powell purchased a home for $150,000. Today, the home is worth $250,000. His remaining mortgage balance is $100,000. Assuming that Simon can borrow up to 75 percent of the market value, what is the maximum amount he can borrow? (LO 5.2)
Present market value of Simon’s home = $250,000. Simon can borrow up to 75 percent of the market value, or $187,500. Simon still owes $100,000 mortgage on his home. Therefore, he can borrow an additional $87,500.
2. Louise McIntyre’s monthly gross income is $3,000. Her employer withholds $700 in federal, state, and local income taxes and $250 in Social Security taxes per month. Louise contributes $100 per month for her IRA. Her monthly credit payments for VISA and MasterCard are $65 and $60, respectively. Her monthly payment on an automobile loan is $375. What is Louise’s debt payments-to-income ratio? Is Louise living within her means? (LO 5.3)
Louise’s Gross Income
=
$3,000
Less: Income taxes
=
-700
Less: Social Security Tax
=
-250
Less: IRA contribution
=
-100
Net take-home pay
=
$1,950
Her monthly payments on VISA, MasterCard, and a car loan add up to $500 per month. Louise’s debt payments to income ratio is 500 to 1,950, or 25.6 percent. This ratio exceeds the recommended 20 percent figure. Therefore, Louise is overextended. Her maximum monthly loan and credit card payments should not...

...Nowadays, every business needs finance. But at the same time, bad debt has become a stinging problem for the creditors. Many companies are faced with the high credit risk, so obtaining it can be one of the most difficult parts of running your business.
So what is the solution for this problem? You can see, there are so many types of business finance, including: bank loans, credit cards, leasing, even outsides investors, family and friend loans… But in my opinion, one of the quickest forms of low cost business finance is factoring, where you can get up to 85% of the value of your invoice immediately, and the remainder (minus the factoring company’s fee) after the money is collected. kFactoring is one of the best ways to get quick finance, improving your cashflow and allowing you to make the most of your sales without risking late payment.
What is factoring? You can image that just be simple to sell your invoice to a factoring company. You can get cash quickly, have a chance to access immediate funds, without having to wait for the customer to pay the invoice. You also don’t have to collect the debt. Because you transfer the mission to the factoring company. They get debt and have to collect it. Of course, you lose some of the value of the invoice. And the difference between the price it paid for the invoice and the money from the debtor is the factor’s overall profit. They can provide money either with recourse or without...

...INTRODUCTION
This report examines the increasing trends in the amount of debt students are graduating with. The purpose of this report is to prove why these trends need to be stopped, and how they can be stopped. After viewing the statistics from 1993 to the present it will be obvious that student debt is not rising at a steady pace, but that its growth is leading to large financial burdens by many students. Recommendations are given about the actions that can be taken by not only students, but everyone to help improve this dire situation. The changes that student loans have been through over the last couple of years will have a lasting effect on current students, prospective students, parents, and those who have graduated and expect to help their children in college.
The statistics in this report come from various academic programs and programs devoted to improve student debt situations. There are limitations to the survey conducted about the effects student debt has on students. This is due to the limited number of students who were confidentially surveyed at Iowa State University only. A more thou rough study would need to be conducted to further conclude our findings.
To stop the rising debt dilemma a list of activities is given including:
 Voicing opinions
 Lobbying for legislative acts, increase in grant programs, and lender reform programs
 Use of student services
...

...Introduction
When accounting standards change, the impact those changes have on debt contracts is influenced by virtue of the 'rolling' (floating) or 'frozen' generally accepted accounting principles (GAAP) applied to the debt covenants within the contracts. Positive accounting theory (PAT) assumes managers will act in self interest once contracts are in place (Deegan 2009, p. 292) and this may or may not lead managers to lobby standard setters in support for or against draft changes to standards or the introduction of new standards based on this premise.
Discussion
Debt contracts are instruments used by lenders to reduce risk and the agency costs of debt (the costs associated with the divergent behaviour of the borrower in PAT) and can be explained from an efficiency perspective (Deegan 2009 p.292). The positive accounting theory of debt assumes borrowers (managers) will use accounting methods to avoid repaying the debt and explains that borrowers may take action that will increase the risk to lenders by incurring more debt or undertaking risky business decisions (Deegan 2009). To reduce their risk lenders will include debt covenants within contracts. Deegan (2008 p. 1357) defines a debt covenant as, '...a restriction within a contract on the operations of a borrowing entity'. Restrictions may be in the form of restricting new...